The Irish Independent reports that the ESB was warned in three separate reports that the two strategic Cork reservoirs could be unable to cope with extreme water volumes, the Irish Independent has learned.
Over the past eight years the reports raised issues about water management on the Lee valley in "an extreme weather event" -- including the capacity of the two lakes above the Inniscarra dam to cope with a large inflow of water.
They warned that the presence of the dams and reservoirs meant there was a "false sense of security".
However, the ESB disputed that it would be liable for any insurance claims after making a decision last Friday to release water from the Inniscarra dam.
"The water was released in a controlled way. . . They (the lakes) had unprecedented levels of water. No one has experienced anything like it in living memory,"an ESB spokesperson said.
Extreme
Yet a key ESB report in 2001 warned that the reservoirs at Inniscarra and Carrigadrohid were too small to cope with extreme water volumes.
The report -- from 2001 -- said that although there would be more flooding on the River Lee if the dams were not in place, the "relatively small size" of the reservoirs meant the amount of flood alleviation was reduced for extreme weather events.
"Consequently a false sense of security may occur,"it warned.
Last year, the Lee Catchment Flood Risk Assessment and Management Study Hydrology Report said that water from the Shournagh and Bride rivers flowing into Cork city was not taken into account by ESB engineers when deciding how much water should be released from the dams.
This means that the power company could release massive volumes of water from the dams without knowing how much water was flowing into the Lee from the Shournagh and Bride rivers. The ESB rejected this report and said the water was measured.
The lack of water for hygiene purposes in some parts of Cork city has now raised public health fears of an easier spread of swine flu -- and one emergency worker said it was like "an Irish Hurricane Katrina".
Some parts of the city may now be without mains drinking water until early December -- and the city council acknowledged that sanitation and public health were now matters of "serious concern".
Insurance companies -- now facing claims estimated at up to €300m -- confirmed they were bracing themselves for an avalanche of claims.
One insurance assessor said that issues now arose in Cork over the precise role the ESB played in the flooding with the release of water from Inniscarra dam last Thursday.
Taoiseach Brian Cowen will view the flood damage for himself today in Cork, Clare and Galway, while Education Minister Batt O'Keeffe will visit flood-hit UCC, which is now effectively closed.
Fine Gael environment spokesman Phil Hogan has already demanded an independent inquiry into the cause of the Cork flooding.
The Irish Independent also reports that speculation on the future of Irish Nationwide intensified this weekend amid reports that Finance Minister Brian Lenihan has told the embattled building society to hand over its homeloan and deposit books to EBS.
The direction, reportedly given by Mr Lenihan "in recent days", would effectively leave Nationwide with no business once it had signed over the two books to EBS and passed its €8bn commercial property loans portfolio to the National Asset Management Agency.
The Department of Finance, Nationwide and EBS all declined to comment last night, but sources close to both Nationwide and the Department of Finance questioned the suggestion that Nationwide's absorption into EBS was a fait accompli.
"The minister has said publicly that he wants Nationwide and EBS to work together,"a source close to the department said."What's being talked about here (in the weekend reports) is one of the options, nothing has been decided yet."
Merger
The comments were echoed by sources close to Nationwide, who noted that the recent discussions held with the department were "exploratory in nature".
"A range of options have been discussed, it's not believed that a decision will be arrived at for some time,"one said.
The "range of options" is understood to include a merger between the two building societies rather than an all-out takeover, as well as a solution that would involve a third financial institution, most likely Permanent TSB.
Sources close to EBS, however, said the weekend reports were "broadly accurate," with an EBS takeover of Nationwide's books being the most likely outcome. He added that it was "not surprising" that sources close to both the Department of Finance and Nationwide would deny the development.
Nationwide and EBS have been engaged in exploratory talks for several weeks now. Nationwide's assets include a €2bn homeloan book as well as a deposit book that is worth about €5bn.
But the building society has been stretched to breaking point by its ailing commercial property loans.
The Irish Times reports that the recession is heavily affecting people’s lifestyles, with more than a third cutting back on essentials like electricity and home-heating, according to the results of an Irish Times /Behaviour Attitudes opinion poll.
A large number (36 per cent) say they have cut spending on electricity over the past year, as well as home-heating (33 per cent) and mobile phone use (27 per cent).
Most people are trying to avoid cutting back on basics such as medicine and health insurance. However, many have already had to make sacrifices in this area.
Significant numbers – almost 400,000 people – are spending less on family medicine (11 per cent of respondents) over the past year, as well as health insurance (10 per cent), GP visits (16 per cent) and dental appointments (18 per cent).
A breakdown of the figures indicates that people from higher and lower income groups are cutting back on their spending in almost exactly the same way. Even with essentials like home-heating and electricity, people from both lower and higher income groups are cutting back at a similar rate.
Those most likely to be spending less are younger people. People in the 25- to 34-year age group were spending less on day-to-day expenses than all other age groups.
The findings are contained in a poll conducted by Behaviour Attitudes between October 12th and 26th last among a national quota sample of 1,004 adults at 100 sampling points across the State.
The recession is also having a strong effect on people’s social lives. People are much less likely to eat out (55 per cent), visit the pub (48 per cent) or go on family trips involving expenditure (39 per cent).
Instead, many are entertaining at home more than they did a year ago (23 per cent) and spending less on items such as the gym, cinema or takeaways.
Again, it is young people who are most likely to be cutting their spending in these areas.
For example, almost 70 per cent of those in the 25- to 34-year age group have cut back on eating out.
When it comes to seeking support in these difficult times, people are turning mainly towards their family and friends.
Just over half turn to their partner or spouse for emotional reassurance or comfort, while many also confide in female family friends (42 per cent) or in male family friends (35 per cent).
A total of 14 per cent turned to the Catholic Church. Some 32 per cent of over-65s turn to the church, compared to just 4 per cent of those aged 18 to 34.
A total of 6 per cent said they had nowhere to turn. Men (8 per cent) were twice as likely as women (4 per cent) to feel that they were on their own.
The Irish Times also reports that a report commissioned by Irish Life has criticised a proposal to introduce a single rate of tax relief of 30 per cent on pension contributions.
The report by economist Moore McDowell found such a change would reduce the incentive for anyone earning more than €35,000 to make pension contributions.
Mr McDowell’s report is also critical of plans to reduce the taxfree lump sum. It has been proposed that the tax-free lump sum should be capped at about €200,000.
Mr McDowell asserts that, contrary to common belief, the current tax reliefs encourage middle income earners – those earning €45,000 to €75,000 a year – to save for their pension much more than higher income earners.
“The proposed change to a flat 30 per cent rate means that anyone [earning] over €35,000 will face a reduced incentive to make pension contributions,”Mr McDowell states. “The incentive declines more or less uniformly and disappears at about €130,000, and thereafter is actually negative: you are worse off if you subscribe to a pension than if you do not.”
Mr McDowell argues that criticisms of the current system stem from a misunderstanding of the way in which the tax treatment of pensions works in practice.
“A myth has grown which suggests that tax reliefs on pensions are net benefits to the taxpayer,”he stated.
“They conveniently ignore the fact that pension funds are taxed at the point of drawdown not at the point of contribution but the net effect for the exchequer and for the taxpayer are broadly neutral under the current system.
“However, under the reforms proposed, middle-income earners will be disadvantaged by paying the marginal rate of tax on drawdown but enjoying less relief at the point of contribution.”
The economist, who himself is retired, said the proposed change to a flat 30 per cent rate of relief would mean charging 11 per cent income tax on contributions in the case of those paying the higher rate of tax.
A commitment to revising the tax treatment of pension contributions was included in the revised programme for government.
The Government has agreed to introduce a single rate of relief on contributions of 30 per cent.
This was mooted in the Green Paper of 2007 on pensions and in the report of the Commission on Taxation in its report published in September, 2009.
Two reasons have been put forward for the move to a single rate. The first is that the current system means that those on the higher rate of tax earn a bigger tax break than those on the lower rate. The second is that the exchequer can no longer afford to forego an estimated €2.9 billion in tax revenues.
Mr McDowell was commissioned by Irish Life, Ireland’s biggest pensions provider, to study proposed reforms in the context of debate in Ireland about tax reliefs.
Commenting on the report, Irish Life chief executive Gerry Hassett said:“Clearly the Government is facing extremely difficult decisions in the coming budget, but pensions are a long-term issue that has significant consequences for our society.”
The Irish Examiner reports that substantial numbers of jobs and critical exports will be lost due to the Government’s refusal to extend the export credit guarantee system to Irish-owned business.
The Irish Exporters Association (IEA) has said it is dismayed at the decision by Tánaiste and Minister for Enterprise, Trade and Employment Mary Coughlan not to extend the facility on the grounds that the sector is too small to merit inclusion.
‘’Effectively, the Tánaiste has decided it is not worth improving the export credit insurance options for Irish exporters on the basis that it covers only a small level of exports and is primarily one sector – the agri-food sector, and in one market mainly – the UK market", said IEA chief executive John Whelan.
In doing so the minister has ignored the reality that the indigenous sector is the one heavily reliant on export credit insurance, he said. While accounting for just €14.3 billion or under 10% of total exports, it is responsible for half the jobs tied up in the sector.
In Ireland’s case, 43% of all indigenous exports go to Britain, two thirds of which are in agri-food.
As a result of this "lack of vision" by the Tánaiste and her officials many indigenous businesses will lose more exports and more jobs, the IEA warned in a statement.
It has taken the Tánaiste and her officials 12 months to reach this conclusion and in effect it has "put the €6bn worth of indigenous exports to the UK at high risk," said Mr Whelan.
Food and drinks exporters face "a real struggle to retain their UK sales" due to profit margin erosion because of sterling’s ongoing depreciation and the need for bigger amounts of cash to fund an increasingly difficult British market.
In the third quarter, food exports to Britain fell by 20% on the prior year, said the IEA.
"The decision also puts Irish exporters out on their own in Europe without a state-backed credit insurance scheme," he said.
Most other EU member states have supported their exporters with credit insurance backing.
Irish exporters have been placed at a competitive disadvantage as they try to increase sales in various other markets internationally where the transition from recession to recovery has started, he said.
At this point, those who can get export credit insurance will steal the march on those who don’t.
The demand for credit insurance, and secure cash flow, will increase as exporters try to expand to meet new sales opportunities. Employment subsidies are irrelevant if they cannot secure sales, he said.
The Financial Times reports that Microsoft has had discussions with News Corp over a plan that would involve the media company’s being paid to “de-index” its news websites from Google, setting the scene for a search engine battle that could offer a ray of light to the newspaper industry.
The impetus for the discussions came from News Corp, owner of newspapers ranging from the Wall Street Journal of the US to The Sun of the UK, said a person familiar with the situation, who warned that talks were at an early stage.
However, the Financial Times has learnt that Microsoft has also approached other big online publishers to persuade them to remove their sites from Google’s search engine.
News Corp and Microsoft, which owns the rival Bing search engine, declined to comment.
One website publisher approached by Microsoft said that the plan “puts enormous value on content if search engines are prepared to pay us to index with them”.
Microsoft’s interest is being interpreted as a direct assault on Google because it puts pressure on the search engine to start paying for content.
“This is all about Microsoft hurting Google’s margins,” said the web publisher who is familiar with the plan.
But the biggest beneficiary of the tussle could be the newspaper industry, which has yet to construct a reliable online business model that adequately replaces declining print and advertising revenues.
In a possible sign of negotiations to come, Google last week played down the importance of newspaper content.
Matt Brittin, Google’s UK director, told a Society of Editors conference that Google did not need news content to survive. “Economically it’s not a big part of how we generate revenue,” he said.
News Corp has been exploring online payment models for its newspapers and has taken an increasingly hard line against Google.
Rupert Murdoch, News Corp chairman, has said that he would use legal methods to prevent Google “stealing stories” published in his papers.
Microsoft is desperate to catch Google in search and, after five years and hundreds of millions of dollars of losses, Bing, launched in June, marks its most ambitious attempt yet.
Steve Ballmer, chief executive of Microsoft, has said that the company is prepared to spend heavily for many years to make Bing a serious rival to Google.
Microsoft has sought to differentiate Bing by drawing in material not found elsewhere, though has not demanded exclusivity from content partners. Bing accounted for 9.9 per cent of searches in the US in October, up from 8.4 per cent at its launch, according to ComScore.
James Murdoch, chairman and chief executive of News Corp Europe and Asia, hinted last week that the company was making progress with its online plans. “We think that there’s a very exciting marketplace, potentially a wholesale market place for digital journalism that we’ll be developing,” he said
The FT also reports that the private sector investment needed to tackle climate change will not be made without a binding international deal on carbon emissions, according to the head of a big business coalition.
Lars Josefsson, chairman of Combat Climate Change, a group including BP, General Electric, Unilever and more than 60 other large companies, said business was ready to act but would not do so without a clear regulatory framework.
“The necessary investments will only be made when you have a binding treaty and legislation,”he said in an interview.
“Of the money required to implement a deal, the vast majority – about 80 per cent – will come from the private sector. That can only come when there is a stable legal framework.”
Hopes of achieving a binding treaty at next month’s climate change summit in Copenhagen have been abandoned but world leaders are still aiming to sign an international deal that would cover all the substantive points. This would be codified into legal language within six months to a year and then submitted to national parliaments for ratification.
World heading towards‘tipping points’
The world is heading for “tipping points” in the climate system that would lead to damage worth hundreds of billions of dollars within the next few decades, according to a joint report from Allianz, the insurer, and WWF, the environmental group, reports Fiona Harvey.
More than $25,000bn (€16,900bn, £15,000bn) of property would be at stake in the world’s biggest coastal cities alone if sea levels were to rise 50cm by 2050, a level that scientific research says is likely if emissions levels are not reduced sharply.
If temperatures rise as predicted, within a few decades the south-western states of the US, including most of California, would suffer severe drought and dustbowl conditions.
A separate study from the European Climate Foundation said the emissions targets proposed by governments would be inadequate to avoid such consequences and must be substantially raised.
Mr Josefsson, chief executive of Vattenfall, the Swedish power group, said private sector efforts to tackle climate change were being held up by the stalling political process and called for business to be given a bigger role in negotiations.
“It is very important to get business more engaged because they have the knowledge of the market economy and how investment decisions are made. Those decisions rest with the business community, not the political community,”he said.
While not all business leaders are as enthusiastic for a deal as Mr Josefsson, his comments reflect frustration among companies as they struggle to plan investments without knowing if and how carbon emissions will be regulated at an international level after 2012, when the provisions of the Kyoto protocol expire.
As well as western companies, Mr Josefsson’s group includes developing world members, such as China National Offshore Oil and Russia’s Gazprom.
Mr Josefsson met José Manuel Barroso, president of the European Commission, in Brussels on Friday to deliver a “scorecard” detailing the group’s view of what would constitute success and failure at Copenhagen.
He said success would require detailed commitments on emissions cuts, financing to help developing countries meet the targets and support for private sector investment in green technology.
Vattenfall, owned by the Swedish government, has invested heavily in renewable energy and research into carbon capture and storage. But environmentalists have criticised the utility’s continued dependence on coal-fired power stations in Germany and Poland.
“We do not invest in coal because we love coal,”said Mr Josefsson. “We invest in coal because the people in Germany and Poland need electricity. Our job is to over time turn them into zero emissions plants.”
It was announced last week that Mr Josefsson would retire next year after disputes with the Swedish government over strategy and safety breaches at its nuclear plants.
He insisted the transition to a new chief executive was “harmonious” after 10 years at the helm but said he was angered by his treatment by the Swedish government and media.
“I feel I have not been treated with respect and the company has not been treated with respect and I feel that is wrong.”
The New York Times reports that the United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true.
But that happy situation, aided by ultralow interest rates, may not last much longer.
Treasuryofficials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.
Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.
With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.
In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.
The potential for rapidly escalating interest payouts is just one of the wrenching challenges facing the United States after decades of living beyond its means.
The surge in borrowing over the last year or two is widely judged to have been a necessary response to the financial crisis and the deep recession, and there is still a raging debate over how aggressively to bring down deficits over the next few years. But there is little doubt that the United States’ long-term budget crisis is becoming too big to postpone.
Americans now have to climb out of two deep holes: as debt-loaded consumers, whose personal wealth sank along with housing and stock prices; and as taxpayers, whose government debt has almost doubled in the last two years alone, just as costs tied to benefits for retiring baby boomers are set to explode.
The competing demands could deepen political battles over the size and role of the government, the trade-offs between taxes and spending, the choices between helping older generations versus younger ones, and the bottom-line questions about who should ultimately shoulder the burden.
“The government is on teaser rates,” said Robert Bixby, executive director of the Concord Coalition, a nonpartisan group that advocates lower deficits.“We’re taking out a huge mortgage right now, but we won’t feel the pain until later.”
So far, the demand for Treasury securities from investors and other governments around the world has remained strong enough to hold down the interest rates that the United States must offer to sell them. Indeed, the government paid less interest on its debt this year than in 2008, even though it added almost $2 trillion in debt.
The government’s average interest rate on new borrowing last year fell below 1 percent. For short-term i.o.u.’s like one-month Treasury bills, its average rate was only sixteen-hundredths of a percent.
“All of the auction results have been solid,”said Matthew Rutherford, the Treasury’s deputy assistant secretary in charge of finance operations. “Investor demand has been very broad, and it’s been increasing in the last couple of years.”
The problem, many analysts say, is that record government deficits have arrived just as the long-feared explosion begins in spending on benefits under Medicare and Social Security. The nation’s oldest baby boomers are approaching 65, setting off what experts have warned for years will be a fiscal nightmare for the government.
“What a good country or a good squirrel should be doing is stashing away nuts for the winter,” said William H. Gross, managing director of the Pimco Group, the giant bond-management firm.“The United States is not only not saving nuts, it’s eating the ones left over from the last winter.”
The current low rates on the country’s debt were caused by temporary factors that are already beginning to fade. One factor was the economic crisis itself, which caused panicked investors around the world to plow their money into the comparative safety of Treasury bills and notes. Even though the United States was the epicenter of the global crisis, investors viewed Treasury securities as the least dangerous place to park their money.
On top of that, the Fed used almost every tool in its arsenal to push interest rates down even further. It cut the overnight federal funds rate, the rate at which banks lend reserves to one another, to almost zero. And to reduce longer-term rates, it bought more than $1.5 trillion worth of Treasury bonds and government-guaranteed securities linked to mortgages.
Those conditions are already beginning to change. Global investors are shifting money into riskier investments like stocks and corporate bonds, and they have been pouring money into fast-growing countries like Brazil and China.
The Fed, meanwhile, is already halting its efforts at tamping down long-term interest rates. Fed officials ended their $300 billion program to buy up Treasury bonds last month, and they have announced plans to stop buying mortgage-backed securities by the end of next March.
Eventually, though probably not until at least mid-2010, the Fed will also start raising its benchmark interest rate back to more historically normal levels.
The United States will not be the only government competing to refinance huge debt. Japan, Germany, Britain and other industrialized countries have even higher government debt loads, measured as a share of their gross domestic product, and they too borrowed heavily to combat the financial crisis and economic downturn. As the global economy recovers and businesses raise capital to finance their growth, all that new government debt is likely to put more upward pressure on interest rates.
Even a small increase in interest rates has a big impact. An increase of one percentage point in the Treasury’s average cost of borrowing would cost American taxpayers an extra $80 billion this year — about equal to the combined budgets of the Department of Energy and the Department of Education.
But that could seem like a relatively modest pinch. Alan Levenson, chief economist at T. Rowe Price, estimated that the Treasury’s tab for debt service this year would have been $221 billion higher if it had faced the same interest rates as it did last year.
The White House estimates that the government will have to borrow about $3.5 trillion more over the next three years. On top of that, the Treasury has to refinance, or roll over, a huge amount of short-term debt that was issued during the financial crisis. Treasury officials estimate that about 36 percent of the government’s marketable debt — about $1.6 trillion — is coming due in the months ahead.
To lock in low interest rates in the years ahead, Treasury officials are trying to replace one-month and three-month bills with 10-year and 30-year Treasury securities. That strategy will save taxpayers money in the long run. But it pushes up costs drastically in the short run, because interest rates are higher for long-term debt.
Adding to the pressure, the Fed is set to begin reversing some of the policies it has been using to prop up the economy. Wall Street firms advising the Treasury recently estimated that the Fed’s purchases of Treasury bonds and mortgage-backed securities pushed down long-term interest rates by about one-half of a percentage point. Removing that support could in itself add $40 billion to the government’s annual tab for debt service.
This month, the Treasury Department’s private-sector advisory committee on debt management warned of the risks ahead.
“Inflation, higher interest rate and rollover risk should be the primary concerns,”declared the Treasury Borrowing Advisory Committee, a group of market experts that provide guidance to the government, on Nov. 4.
“Clever debt management strategy,”the group said,“can’t completely substitute for prudent fiscal policy.”
The NYT also reports that the Senate voted on Saturday to begin full debate on major health care legislation, propelling President Obama’s top domestic initiative over a crucial, preliminary hurdle in a formidable display of muscle-flexing by the Democratic majority.
“Tonight we have the opportunity, the historic opportunity to reform health care once and for all,” said Senator Max Baucus, Democrat of Montana, and a chief architect of the legislation. “History is knocking on the door. Let’s open it. Let’s begin the debate.”
The 60-to-39 vote, along party lines, clears the way for weeks of rowdy floor proceedings that will begin after Thanksgiving and last through much of December.
The Senate bill seeks to extend health benefits to roughly 31 million Americans who are now uninsured, at a cost of $848 billion over 10 years.
The House earlier this month approved its health care bill by 220 to 215, with just one Republican voting in favor. That measure is broadly similar to the Senate legislation, but there are some major differences that would have to be resolved before a bill could reach Mr. Obama, and that would almost surely push the process into next year.
As the Democrats succeeded Saturday in uniting their caucus by winning over the last two holdouts, big disagreements remained, making final approval of the bill far from certain.
Two reluctant Democratic senators, Mary L. Landrieu of Louisiana and Blanche Lincoln of Arkansas, warned that their support for a motion to open debate did not guarantee that they would ultimately vote for the bill. Their remarks echoed previous comments by several other senators, including Ben Nelson, Democrat of Nebraska, and Joseph I. Lieberman, independent of Connecticut.
Those comments made clear that more horse-trading lies ahead and that major changes might be required if the bill is to be approved. And it suggested that the Senate majority leader, Harry Reid of Nevada, who relied only on members aligned with his party to bring the bill to the floor, may yet have to sway one or more Republicans to his side to get the bill adopted.
The Senate Republican leader, Mitch McConnell of Kentucky, said his party’s opposition would persist. “The battle has just begun,” he said.
In a rare ceremonial gesture reserved for major votes, senators cast their yeas and nays from their desks in the chamber, each one rising to voice his or her position. Senator George V. Voinovich, Republican of Ohio, was not present and did not vote.
After the vote, Mr. Reid said he understood that Ms. Landrieu was already working with two other Democratic senators, Thomas R. Carper of Delaware and Charles E. Schumer of New York, to see if they could devise a public insurance plan with broad appeal.
The White House issued a statement praising the vote. “The President is gratified that the Senate has acted to begin consideration of health insurance reform legislation,” his press secretary, Robert Gibbs, said, adding that President Obama“looks forward to a thorough and productive debate.”
Mrs. Lincoln, who faces a tough re-election campaign next year and has in recent weeks been the target of millions of dollars in television advertising by both sides in the health care fight, said pointedly that she would not vote for the measure if it retained a government-run health insurance plan, known as the public option, to compete with private insurers. “Although I don’t agree with everything in this bill, I believe it is more important that we begin debate on how to improve the health care system for all Americans,” said Mrs. Lincoln, who was the last uncommitted Democrat, and whose speech, at about 2:30 p.m. Saturday, lifted a cloud of suspense that had hovered around the Capitol.
She added: “But let me be perfectly clear. I am opposed to a new government-administered health care plan as a part of comprehensive health insurance reform, and I will not vote in favor of the proposal that has been introduced by leader Reid as it is written.” But Senator Lieberman, who voted to take up the health care bill, said he was still staunchly opposed to a government-run plan. It is “a terrible idea,” he said.
Ms. Landrieu, whose support came after she won a provision that could be worth more than $100 million in additional federal aid for her financially troubled state, said, “I have decided there are enough significant reforms and safeguards in this bill to move forward, but much more work needs to be done.”
A parade of Democrats and Republicans spent Saturday laying out their arguments for and against the bill in floor speeches.
Mr. Reid, in a rousing closing speech given at his customary volume, which is barely audible, likened the health care bill to some of the most profound issues confronted by the Senate across history.
“Imagine if instead of debating either of the historic G.I. Bills — legislation that has given so many brave Americans the chance to brave college — if this body had stood silent,”Mr. Reid said.“Imagine if instead of debating the bills that created Social Security or Medicare, the Senate’s voices had been stilled. Imagine if instead of debating whether to abolish slavery, instead of debating whether giving women and minorities a right to vote, those who disagreed were muted, discussion was killed.”
With the Democrats nominally controlling 60 votes — the precise number needed to overcome the Republican attempt to stop the bill — the vote on Saturday evening was the biggest test yet of the Democrats’ resolve and of Mr. Reid’s ability to unite his fragile caucus. Mr. Reid faces a tough re-election fight next year.
The bill would expand health benefits by broadly expanding Medicaid, the federal-state insurance program for low-income people, and by providing subsidies to help moderate-income people buy either private insurance or coverage under a new government-run plan, the public option. And it would impose a requirement that nearly all Americans obtain insurance or pay monetary penalties for failing to do so.
According to the Congressional Budget Office, the cost of the legislation would be more than offset by new taxes and fees and reductions in government spending, so that the bill would reduce future federal budget deficits by $130 billion through 2019.
Mr. Reid accused Republicans who opposed the legislation of “living in a different world.” He and several other Democrats also used their speeches to assail perceived abuses by private insurers. “The health insurance industry has an insatiable appetite for more profit,” Mr. Reid said.
Senate Republicans countered with an impassioned denunciation of the measure as an ill-conceived budget-busting expansion of government and a threat to the health and economic security of all Americans, especially the elderly.
The Republicans sought to portray the vote on Saturday — on whether to end debate on a motion to bring up the health bill — as tantamount to a vote on the bill itself, and to shake the confidence of Democrats who had wavered in recent days.
In his closing argument, just ahead of the vote, Mr. McConnell implored at least a single Democrat to vote no. “If we don’t stop this bill tonight,” he said,“the only debate we’ll be having is about higher premiums, not savings for the American people, higher taxes instead of lower costs, and cuts to Medicare rather than improving seniors’ care.”
“The American people are looking at the Senate tonight; they’re hoping we say no to this bill,”Mr. McConnell added moments later, holding up a single index finger. “All it would take,” he said, “is just one member of the other side of the aisle, just one, to give us an opportunity not to end the debate but to change the debate in the direction the American people would like us to go.”
Mr. McConnell warned of the political consequences for senators who voted to move ahead. “Senators who support this bill have a lot of explaining to do,” he said.“Americans know that a vote to proceed on this bill, to get on this bill, is a vote for higher premiums, higher taxes and massive cuts to Medicare.”
Republicans also said that the vote was a proxy for a larger dispute over abortion, because they said the bill did not sufficiently restrict the use of federal money for insurance covering abortions. Senator Mike Johanns, Republican of Nebraska, described the vote as “the key vote on abortion in the health care debate.”
Saturday night’s vote was required because Senate rules and precedent have long granted a right of virtually unlimited debate, or filibuster, to the minority that can be curtailed only by a supermajority vote of 60 senators to move ahead. Currently, there are 58 Democrats in the Senate and two independents who routinely align with them. If the Democrats had lost the vote, they could have tried again, presumably after changing the bill to try to attract more votes.
Senator Patrick J. Leahy, Democrat of Vermont assailed the Republicans as obstructionists on Saturday morning. “I will vote today to end the filibuster so the Senate can begin the historic debate to improve and reform our nation’s health insurance system,” he said.“Let’s not duck the debate, let the debate begin. Let’s not hide from the votes.”
While Democrats generally agree on the broad goals of the legislation, to cover the uninsured and to slow the growth in health care spending, there are potentially serious disagreements over any number of provisions that could sink the bill.
Ms. Landrieu, in her speech, methodically cataloged provisions of the bill that she liked and those that she said needed improvement.
Under the bill, she said, owners of small businesses would no longer face “volatile costs” for health insurance. In addition, she said, the bill would “encourage employers to move away from high-cost benefit plans” and shift some compensation to wages.
But more needed to be done to improve the bill, she argued, particularly to help small businesses and the self-employed. And she issued a stern warning about the public option, one of the most contentious features of the sweeping health care legislation.
